On Wednesday Chesapeake Energy announced a “private exchange offer for senior notes.” Disclaimer right up front: We’re not high finance people here at MDN. Some of this stuff befuddles us. However, we’ll try to make sense of what Chessy is offering. If we can boil it all down, Chesapeake is offering to exchange senior notes, or IOUs that are coming due in the next few years, with something called second lien (or secured) notes. Second lien notes are, of course, lower in priority for payback (should there be a default) than more senior notes. Chesapeake is hoping to entice current unsecured (no guarantee of a payback) noteholders with notes currently due in 2017/2018 with secured notes due in 2022 with a more favorable interest rate. The secured notes, as we noted, are second-in-line to other notes and debt obligations. Chesapeake is hoping to exchange up to $1.5 billion of new 8% senior secured second lien notes due in 2022 for certain outstanding unsecured notes. Will they be successful?…
